Libya: Extending the Function of the Central Bank

How the Tools of Finance are Used to Effect Political Change

Robert Parry writes:  The U.S. scheme for establishing the authority of the “unity government” centers on using the $85 billion or so in foreign reserves in Libya’s Central Bank to bring other Libyan leaders onboard. But that strategy may test the question of whether the pen – poised over the Central Bank’s check book – is mightier than the sword, since the militias associated with the rival regimes have plenty of weapons.

Besides the carrot of handing out cash to compliant Libyan politicians and fighters, the Obama administration also is waving a stick, threatening to hit recalcitrant Libyans with financial sanctions or labeling them “terrorists” with all the legal and other dangers that such a designation carries.

But can these tactics – bribery and threats – actually unify a deeply divided Libya, especially when some of the powerful factions are Islamist and see their role as more than strictly political, though the Islamist faction in Tripoli is also opposed to the Islamic State?

After the sea landing on Wednesday, the “unity government” began holding official meetings on Thursday, but inside the heavily guard naval base. How the “unity” Prime Minister Fayez Sirraj and six other members of the Presidency Council can extend their authority across Tripoli and then across Libya clearly remained a work in progress, however.

The image of these “unity” officials, representing what’s called the Government of National Accord, holed up with their backs to the sea at a naval base, unable to dispatch their subordinates to take control of government buildings and ministries, recalls how the previous internationally recognized government, the House of Representatives or HOR, met on a cruise ship in Tobruk in the east.

Meanwhile, HOR’s chief rival, the General National Congress, renamed the National Salvation government, insisted on its legitimacy in Tripoli, but its control, too, was limited to several Libyan cities.

On Wednesday, National Salvation leader Khalifa Ghwell called the “unity” officials at the naval base “infiltrators” and demanded their surrender. Representatives of the “unity government” then threatened to deliver its rivals’ names to Interpol and the U.N. for “supporting terrorism.”

On Friday, the European Union imposed asset freezes on Ghwell and the leaders of the rival parliaments in Tripoli and in Tobruk. According to some accounts, the mix of carrots and sticks has achieved some progress for the “unity government” as 10 towns and cities in western Libya indicated their support for the new leadership.

Clinton’s State Department email exchanges revealed that her aides saw the Libyan war as a chance to pronounce a “Clinton doctrine,” bragging about how Clinton’s clever use of “smart power” could get rid of demonized foreign leaders like Gaddafi. Clinton didn’t miss a second chance to take credit on Oct. 20, 2011, after militants captured Gaddafi, sodomized him with a knife and then murdered him.

With Gaddafi and his largely secular regime out of the way, Islamic militants expanded their power over the country. Some were terrorists, just as Gaddafi had warned.

One Islamic terror group attacked the U.S. consulate in Benghazi on Sept. 11, 2012, killing U.S. Ambassador Christopher Stevens and three other American personnel, an incident that Clinton called the worst moment of her four-year tenure as Secretary of State.

The aftermath of the Clinton-instigated “regime change” in Libya also shows how little Clinton and other U.S. officials learned from the Iraq War disaster.